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Samsung Expects To Lose $3 Billion Due To Galaxy Note 7

Samsung has announced today that the decision to stop selling the Galaxy Note 7 will cost the company over $3 billion over the next two quarters. The company had already accounted $3 billion in expenses for the recall and the decision to stop selling the device in its earnings guidance issued on October 11, with today’s announcement being made to “inform the market on the impact of the Galaxy Note7 discontinuation.”

Samsung expects around $2 billion in lost revenue for the fourth quarter of 2016, with another $1 billion being lost in revenue in the first quarter of 2017. The company also reassures that going forward it will focus on enhancing the safety of its products for consumers by “making significant changes” in its QA process.

The company already allocated the expected direct cost from the discontinuation of Galaxy Note7 sales in its third quarter earnings guidance revision announced on Oct. 11, but expects the drop in revenue from the discontinued sales to continue to have a negative impact on operating profit for the next two quarters.

The negative impact is estimated in the mid-2 trillion won range for the fourth quarter of 2016 and at approximately 1 trillion won for the first quarter of 2017.

To soften the blow to its mobile business, Samsung will be expanding the sales of its flagship Galaxy S7 and S7 edge handsets. While six months old, the Galaxy S7 and S7 edge are still among the best Android smartphones available in the market right now.

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